February 11, 2014

The U.S. Department of Justice (DOJ) recently announced a $40.1 million final settlement agreement with CareFusion Corp. to resolve allegations that the California-based medical device manufacturer paid kickbacks to encourage sales and promoted off-label use of ChloraPrep, a pre-surgical skin treatment. This is a comprehensive report of how the CareFusion settlement has gained the attention of medical practitioners, industry leaders, publishers and legislators, and rocked the world of patient safety.

Although there was no determination of wrongdoing, this settlement illustrates the costly consequences of lawsuits brought by relators under the qui tam, or whistleblower, provisions of the False Claims Act (FCA) coupled with investigations by the Department of Health and Human Services Office of Inspector General (HHS-OIG). As organizations distance themselves from alleged kickback recipient Dr. Charles Denham, and the scientific community questions the ChloraPrep research of Dr. Rabih Darouiche, this case also uniquely underscores how allegations of kickbacks can undermine entire careers and shake confidence in doctors' independence from corporate pharmaceutical and device manufacturer influence.

The CareFusion Whistleblower Suit & Settlement

As we previously reported, whistleblowers are filing increasing numbers of FCA actions against health care companies. DOJ reports that, "since January 2009, the Justice Department has recovered a total of more than $17 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs." The number of qui tam suits filed in fiscal year 2013 soared to 752 –100 more than the record set the previous fiscal year. Recoveries in qui tam cases during fiscal year 2013 totaled $2.9 billion, with whistleblowers recovering $345 million.

In this case, Cynthia Kirk, Ph.D., the former Vice President of Regulatory Affairs for CareFusion's Infection Prevention unit, brought the initial suit in September 2010, one year after her employment with CareFusion began (United States ex rel. Kirk v. CareFusion et al., No. 10-2492 (D. Kan.)). As the whistleblower, Dr. Kirk received almost $4 million of the total settlement, including almost $600,000 for her attorney fees. Typically, health care whistleblower suits are brought by those in the sales and marketing departments of pharmaceutical or medical device manufacturers, for example the multiple whistleblowers in the J&J settlement for off-label promotion of Risperdal. Dr. Kirk's position as a corporate regulatory officer is notable, as it is precisely the job of compliance and regulatory officers to lead the charge in ensuring corporations comply with all laws and regulations.

According to her public professional profile, Dr. Kirk was employed as a Vice President in charge of regulatory matters at 4 different pharmaceutical or medical device companies in less than 6 years between 2004 and 2010, including CareFusion. Although a qui tam suit from a lead regulatory officer is understandably concerning to industry, the complaint in this case reveals that when Dr. Kirk did attempt to alert her supervisors that CareFusion was illegally selling and marketing ChloraPrep products and that the ChloraPrep study completed by Dr. Rabih Darouiche violated Food and Drug Administration (FDA) rules and regulations, she was terminated and her position was eliminated. The complaint also alleges that the company did not have a compliance committee in place to review compliance concerns.

Though ChloraPrep was FDA approved for certain inpatient skin preparation prior to surgery or injection, the complaint alleged that CareFusion knowingly promoted ChloraPrep for unapproved, "off-label" uses from September 2009 through August 2011. Specifically, CareFusion allegedly promoted ChloraPrep for intravenous preparation and suture care explicitly outside the scope of FDA approval, along with making other unsubstantiated claims about the product reducing infections by 41%, when the FDA only acknowledged that ChloraPrep reduced levels of bacteria. Thus, CareFusion's alleged conduct caused false claims to be submitted to government-funded health care programs, and the government elected to intervene and completed a two-year investigation into Dr. Kirk's claims.

The New York Attorney General's Office reported that "a team from the National Association of Medicaid Fraud Control Units (NAMFCU) worked closely with the federal government on the investigation and conducted the settlement negotiations with CareFusion on behalf of the states. Team members included representatives from the Offices of the Attorneys General for New York, California, Idaho, Maryland, North Carolina and Texas."

Ultimately, 49 states and the District of Columbia joined the federal government in the case, and the global settlement of $40.1 million included as much as over $2 million for the state of New York, over $350,000 for Ohio, and $59,000 for the state of Rhode Island on the lower end. Previously, in April 2013, CareFusion disclosed and set aside funds for the likely settlement. Reports indicate that CareFusion's stock prices were largely unaffected by the news and were actually up on the afternoon of the DOJ announcement. Chairman and CEO Keiran T. Gallahue assured shareholders and the public that "significant investments have been made over the past several years" to ensure that CareFusion's quality and compliance systems align with global best practices.

Although the media buzz around CareFusion has quickly subsided, scrutiny increases each day regarding the doctors alleged to have accepted kickbacks in the case.

Alleged Kickbacks to Dr. Rabih Darouiche, but NEJM Stands by Published Study

Dr. Rabih Darouiche, a triple board-certified practicing medical doctor at the Michael E. DeBakey VA Medical Center in Houston, Texas, was the lead investigator of a study entitled "Chlorhexidine-Alcohol versus Povidone-Iodine for Surgical Site Antisepsis," funded by CareFusion and published in the New England Journal of Medicine in January 2010. The study took place from 2004-2008 and involved over 800 patients at six different university or veterans hospitals in multiple states. The researchers concluded ChloraPrep dramatically reduced surgical site infections compared to an iodine-based pre-surgical preparation. Listed among the study authors was Cardinal Health (later CareFusion) employee, Cynthia Crosby. Her byline stands out among the authors as she is the only one with a bachelor degree as oppose to a doctoral level degree. In the section of the article entitled "Study Methods," Dr. Darouiche acknowledged that "[t]he single author from Cardinal Health (manufacturer of the antiseptic agents studied) substantially contributed to the design and conception of the study and critically revised the manuscript but played no role in data collection or analysis."

The complaint makes several accusations against Dr. Darouiche, including Ms. Crosby's involvement in the editing of the published study results and an allegation that Ms. Crosby was unqualified to serve as CareFusion's monitor over the study, lacking a medical background. The complaint also alleged that CareFusion inappropriately paid Dr. Darouiche to "entertain" medical professionals as part of a sales pitch to promote ChloraPrep; that CareFusion provided Dr. Darouiche with a personal assistant to handle his travel arrangements and speaking engagements regarding ChloraPrep; and the complaint alleges that Dr. Darouiche improperly influenced veterans hospitals to switch to ChloraPrep, despite the increased cost to the Veterans Administration, in exchange for payments to him or his foundation that exceeded fair market value.

Nevertheless, MassDevice and Modern Healthcare both report that the New England Journal of Medicine (NEJM) recently reviewed Dr. Darouiche's study, given the allegations in the complaint revealed by the DOJ press release. On February 5, 2014, NEJM reportedly decided to stand by the article. NEJM media relations manager, Jen Zeis, told MassDevice,

"After we were made aware of the allegations in the legal complaint, we asked Dr. Darouiche to provide evidence of IRB approval and patient consent, and we asked if there were any undisclosed conflicts of interest . . . We received adequate documentation of IRB approval and patient consent and received no evidence of undisclosed conflicts of interest. The authors disclosed relevant financial relationships at the time of submission, and they are listed at the end of the published article. We are satisfied that these matters were handled appropriately."

It is clear that Dr. Darouiche participated in several media interviews highlighting ChloraPrep in the days following the publication of his study. It is also clear that Dr. Darouiche may not have been fully forthright when he told media outlets like the Houston Chronicle that, "[n]either officials at the hospitals nor CareFusion . . . knew about the study results until they were released" publically. Ms. Crosby, as an acknowledged editor of the manuscript, was aware of and helped present the results of the study to the public. Dr. Darouiche also stated publically that "because of the study, the DeBakey VA Medical Center [was] in the process of switching to chlorhexidine-alcohol."

Although there were several allegations against Dr. Darouiche, in the complaint, DOJ chose not to mention him by name in their January 2014 press release and instead focused attention on alleged kickbacks paid to Dr. Charles Denham. Though the two are not connected in the complaint, and neither has been charged or sued by DOJ, MassDevice reported that a webinar hosted by Dr. Denham in February 2010 included Dr. Darouiche as a speaker touting the benefits of ChloraPrep – clearly tying the two together as agents of CareFusion.

Although Unnamed In the Settlement, Fallout Continues for Dr. Charles Denham

Although he was not mentioned at all by name in the complaint or the settlement agreement, DOJ's press release alleged that CareFusion specifically violated the FCA by paying $11.6 million in kickbacks to Dr. Charles Denham through contracts with Health Care Concepts, Inc. (HCC), a company owned and operated by Dr. Denham. Dr. Denham has wholly denied these allegations; however, the press release has triggered several investigations into Dr. Denham's affiliations and possible inappropriate promotion of ChloraPrep products on CareFusion's behalf.

Dr. Denham is founder and chairman of the Texas Medical Institute of Technology (TMIT), a non-profit medical research organization that sponsors a program called Safety Leaders and touts a "National Research Test Bed of more than 3100 hospitals—the world's largest virtual laboratory for research in patient safety." SafetyLeaders, CareMoms, and SpeakerLink are all trademarks of HCC. Dr. Denham is also the Health Editor-in-Chief of The Journal of Patient Safety, published by Wolters Kluwer; and, according to his public professional profile, he is a "2009-2010 Harvard University Advanced Leadership Initiative Senior Fellow, instructor at the Harvard School of Public Health, Adjunct Professor at the Mayo Clinic College of Medicine, and co-founder of the Global Patient Safety Forum in Geneva Switzerland, a convener of worldwide healthcare leaders."

Although Dr. Denham's public statement and the disclosure page on the TMIT website indicate that Dr. Denham's relationship with CareFusion has ceased, and that his contracted services were actually for CareFusion predecessor Cardinal Health, our research indicates that Dr. Denham's ties to CareFusion are convoluted and run deep. For example, Dr. Denham produced the Discovery Channel documentary, Chasing Zero: Winning the War on Healthcare Harm, starring Dennis Quaid. TMIT's website clearly indicates that CareFusion funded this video and owns the trademark "Chasing Zero." The video was also funded in part by HCC and the Association of periOperative Registered Nurses (AORN). It should be noted that AORN President Charlotte Guglielmi appeared in the documentary, and AORN is also supported financially by CareFusion (2013 Corporate Sponsor); and both CareFusion and its former parent company Cardinal Health have supported AORN conferences at the "Investors" level ($25,000-$99,000).

During the time period when Dr. Denham allegedly accepted kickbacks through his company, the payments were in return for Dr. Denham's promotion of ChloraPrep in his role as the co-chair of the Safe Practices Committee of the non-profit National Quality Forum (NQF), which reviews and recommends standardized health care practices. In the press release, DOJ Assistant Attorney General Stuart F. Delery said, "Corrupting the standard-setting process through kickbacks can affect the health care treatment choices that doctors and hospitals may make for patients." NQF quickly released a statement noting that it cut ties with Dr. Denham and his companies in 2010, but NQF did acknowledge that TMIT provided $725,000 in donations to NQF between 2006 and 2010.

ProPublica published an extensive review of Dr. Denham's influence as an NQF committee chair, noting that "two high-profile members of the committee told ProPublica they believe the [guideline creation] process was compromised, resulting in an unintended endorsement of ChloraPrep. And a review by ProPublica found that the group's final 2010 guidelines, currently in effect, still recommend the ChloraPrep formula." Moreover, ProPublica's review of an August 2009 safe practices committee meeting transcript revealed that "Denham twice appears to reference the [Darouiche] New England Journal of Medicine study . . . Although he did not cite the study or ChloraPrep by name, Denham remarked that research to be published soon in a 'major journal' would show the effectiveness of the 2 percent chlorhexidine antiseptic." This meeting took place 5 months before Dr. Darouiche's study was available to the public. Dr. Denham never disclosed his CareFusion financial ties to NQF. "He clearly lied," Dr. Christine Cassel, the NQF's president and CEO told ProPublica. "He just didn't say anything about any of his business relationships."

Organizations and individuals continue to pull away from Dr. Denham and his affiliate corporations. Two days after the ProPublica story, the Leapfrog Group, a consortium of over 185 Fortune 500 companies with over $69 billion in healthcare purchasing power, accepted Dr. Denham's resignation as chairman of their Safe Practices Program. Additionally, Leapfrog reported it took following actions:

2. Partnered with the Armstrong Institute for Patient Safety and Quality at Johns Hopkins Medicine to perform an expert review of the NQF-endorsed safe practices and CPOE Evaluation Tool planned for the 2014 Leapfrog Hospital Survey.

3. Initiated an organization-wide update to its conflict of interest disclosures including all board members, committees, management, and expert panels. Prior disclosures were filed by the board in December 2013.

4. Directly requested from Dr. Denham that TMIT remove any language from its website implying Leapfrog endorsement of "test beds," as this is not authorized. Further, have TMIT remove any reference to a Leapfrog Hospital Survey "flight simulator," as this authorization was only given in 2006 and expired in 2007.

In a well-followed blog, Wachter's World, Dr. Robert Wachter takes a personal review of the well-connected Dr. Denham, and calls this "the first major scandal in the world of patient safety." The comments of several medical professionals who had personal dealings with Dr. Denham reveal the conflicted responses to the kickback allegations. Quoting Brian Johnson, publisher of Massdevice.com, Wachter's blog notes, "'[t]his case is unique because in essence, it appears to be an attempt to influence an entire health care system by paying a key member of a very influential patient safety organization.' Such influence was never possible before. It is now."

Congressional Spotlight on the National Quality Forum

This story has gained the attention of Congress. Senator Charles Grassley of Iowa, one of the authors of the 1986 FCA amendments that made it easier to bring qui tam suits, sent a letter to NQF president, Dr. Cassel, according to ProPublica and Modern Healthcare, citing previous ProPublica stories about the CareFusion settlement and "serious concerns about the NQF's conflict of interest policies." Senator Grassley also expressed concerns about NQF's vetting process, noting that NQF had a five year contract with Dr. Denham's company HCC that it abruptly ended three years early in 2010. Noting the importance of NQF's role in promoting best practices, Senator Grassley requested the following information from the NQF:

What are NQF's policies and procedures to record disclosure of interests? Have these policies been updated since August 2009?

Does NQF verify the accuracy and completeness of disclosure information it receives? If so, how?

Does NQF make disclosures of interest available to its members and/or the general public? Why or why not?

Does NQF disclose donations made to NQF by its members? Why or why not?

What is NQF's vetting process for potential contractors? Has this process changed since NQF awarded a contract to Health Care Concepts?

Senator Grassley requested a response by February 18, 2014. NQF previously announced a new, 30-day review of its guidelines and policies after ProPublica initially raised questions about ChloraPrep and Dr. Denham; however, NQF spokeswoman Ann Greiner affirmed to ProPublica that "the Quality Forum will promptly reply to Grassley." .

4 Takeaways for Industry and Medical Professionals

This case illustrates the importance of independent corporate compliance and regulatory officers who can take issues to a corporate compliance committee as they arise and actually have the authority to affect change. It also underscores the need to empower compliance and regulatory officers as part of the team, as opposed to adversaries of the sales or marketing departments. Pharmaceutical and medical device manufacturers without effective compliance systems in place invite, or create, "qui tam shoppers" – employees who may be looking for a lucrative whistleblower opportunity as opposed to looking for a way to correct inappropriate or illegal corporate behavior.

This case also highlights the importance of independent scientific studies to test a product or device. Corporations must put sufficient firewalls around their hired researchers so that the results of any study don't become tainted by allegations of impropriety or undue influence.

Policy and Medicine has previously reported on the potential chilling effect of Open Payments on physician/industry relationships. Prominent allegations of kickbacks reflect poorly on the medical profession as a whole and stoke public mistrust. Nevertheless, physician/industry relationships are crucial to encouraging innovation and promoting best practices, and it is important that all professionals are forthright when disclosing their affiliations, to educate the public about the difference between appropriate physician/industry interactions versus those who attempt to manipulate existing systems or cross forbidden lines.

This case also challenges the scientific evidence that good study showing reductions in infections is enough for clinical adoption that the courts need to take that into consideration in cases. The question has to be asked is if ChloraPrep saved lives from hospital acquired infections where are the interests of those patients represented in a case such as this.

Finally, this case does highlight the need to reflect on the perverse incentive created by whistleblower laws that lead employees to watch and report, rather than engage and correct, corporate wrongdoing. The record number of qui tam lawsuits in 2013 is not a positive sign. Hopefully in the coming years, as more companies embrace a strong corporate culture of compliance, the number will decrease and the public faith in our health care systems and our health care professionals will be renewed.